This Week in Startups - DOJ sues Google over ad practices, Ticketmaster takes the stand + LA26 founders | E1664

Episode Date: January 24, 2023

Please take our audience survey!: https://launchevents.typeform.com/to/K5RhKaEH Molly goes solo today to cover the DOJ joining eight states to file an anti-trust lawsuit against Google (2:04) before covering Ticketmaster taking the stand in a Senate hearing today. (15:37) Producer Rachel then joins to discuss the latest on user-friendly ticket competitors. (23:07) Then, Molly is joined by two different LA26 founders: Rhian Beutler of Govalo (32:47) and Daniel Sakhai of HeyHire! (44:44) (0:00) Molly kicks off the show (2:04) the DOJ’s lawsuit with Google (9:16) AgeTech Collaborative - Find out more and apply at https://agetechcollaborative.org/twist (10:51) Google and Microsoft’s prior lawsuits with the DOJ (15:37) Ticketmaster’s senate hearing (21:30) AgeTech Collaborative - Find out more and apply at https://agetechcollaborative.org/twist (23:06) Rachel joins Molly to discuss the latest on user-friendly ticket competitors (31:18) Nutrisense - Use code TWIST and get $30 off at nutrisense.io/twist (32:47) Rhian Beutler of Govalo joins Molly (44:44) Daniel Sakhai of HeyHire joins Molly FOLLOW Rhian: https://twitter.com/rhiankatie FOLLOW Daniel: https://www.heyhire.com/ FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Hey, everybody. It is Tuesday on this weekend startups, and I wish I could tell you that Jason was resting because as his adopted mother, I keep trying to get him to do that. But he's not. He's on airplane, uh, traveling for work, of course. So let's send him some good vibes and hope he heals up soon and doesn't make it worse. I am going to start the show with some solo dolo news because I'm really bummed that Jason is not here to talk about the DOJ suing Google to try to break up its digital ads business. And we have a whole antitrust story arc today. We're going to keep talking about antitrust because Ticketmaster finally got called before Congress to answer for its alleged anti-competitive practices. Thank you, Taylor Swift. We're going to cover some of that. Then producer Rachel joins to discuss her experience with an artist who is trying to find Ticketmaster alternatives. Maybe the market can solve this problem for us. And then we've got some startups for you.

Two amazing Launch Accelerator founders join me. to break down their businesses and their paths to $100 million. It's going to be an awesome show. Stick with me. This week in Startups is brought to you by Age Tech Collaborative. Startups, your go-to market team is waiting. Age Tech Collaborative's Cutting Edge Accelerator program

connects you with investors, test beds, like-minded innovators, and industry expertise. They're taking Age Tech to the next level. Join them at agtech collaborative.org slash twist. And Nutrisense combines cutting-edge technology and human expertise so you can see how your body responds to different food, exercise, stress, and sleep in real time. By pairing a CGM with their app and expert dietitian guidance, Nutrisense can help you reach your health goals. Use code twist and get 30. Use code twist and get $30 off at NutraSense.io slash twist.

All right, let's get right into this breaking news. The DOJ has teamed up with eight states to sue Google over its dominance in the digital ads market. And they're asking for Google to spin off its ad business and maybe some more. Obviously, this would be, I don't even have the right word. a tsunami, totally massive, a like 9 on the Richter scale earthquake for the entire ad tech industry if Google is forced to spin off its ads business, not to mention kind of a big deal for Alphabet. The Biden Department of Justice has actually been signaling that it's going to get a lot more

aggressive with the tech industry on antitrust specifically. There have been some stories talking about how this lawsuit was coming and that like Apple could be next, maybe some scrutiny on Microsoft. This is a big move, though, especially since big tech lobbyists and a lot of big tech money have managed to effectively kill antitrust legislation that had been proposed in Congress. Here's a little, let's do a little context, a little level set on Google's ad dominance and why they might be in the spotlight here. I mean, first of all, the House of Representatives, I think in 2020, did a report on the tech industry and its dominance overall as part of this kind of antitrust push and noted that. that Google specifically has put itself in a pretty great place. Google controls more than a quarter of U.S. digital ads.

It's currently number one in terms of digital ad market share with that more than a quarter, 28.8% last year. That's actually down a little bit from 36.7% in 2016, according to insider intelligence. Another chart from Bloomberg using 2023 e-marketer data shows Google at 26.5% of the U.S. digital ad market, so significantly larger than Meta and Amazon. Last quarter, Google's ad business made up about 79% of its total revenue, so when I say it would be a big deal if they had to split or if there were some other remedy that affected that business,

that's what I mean. Ads generated 54.5 billion out of Alphabet's 69.1 billion total revenue. Google remains the market leader by a significant margin. So the lawsuit basically says that Google controls the vast majority of the tools that are used for digital advertising and is, of course, one of the major places that those ads actually live, and that that is all to the detriment of advertisers, publishers, publishers, and consumers. Here's some quotes from the lawsuit. One industry behemoth, Google, has corrupted legitimate competition in the advertising. ad tech industry by engaging in a systematic campaign to seize control of the wide swath of

high-tech tools used by publishers, advertisers, and brokers to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising marketplace, Google has used anti-competitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies. The lawsuit also tries to explain how Google does. does this, I mean, going all the way back to, you know, its acquisition of double-click in 2000, I think. Here are a couple more quotes from the lawsuit.

Google, a single company with pervasive conflicts of interest now controls, one, the technology used by nearly every major website publisher to offer advertising space for sale, two, the leading tools used by advertisers to buy that advertising space, and three, the largest ad exchange that matches publishers with advertisers each time that ad space is sold. To understand this even more simply, the lawsuit actually quotes an unnamed Google ad executive

who said the following, quote, is there a deeper issue with us owning the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the New York Stock Exchange. Yeah, what that person said. All right, so then the law

lawsuit, you know, maybe this doesn't matter, right? Google makes a bunch of money, but who actually gets hurt here? Maybe it's just efficiencies. Economies of scale works great for everybody. Well, the complaint addresses that, because this really is the crux of antitrust law. You don't have to necessarily be a monopoly in that you have 90% market share. The point is, is your behavior anti-competitive and is there harm? So the complaint says, quote, the harm is clear. Website creators earn less and advertisers pay more than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants.

And this conduct hurts all of us because as publishers make less money from advertisements, fewer publishers are able to offer internet content without subscriptions, paywalls, or alternative forms of monetization. one troubling but revealing statistic demonstrates the point. On average, Google keeps at least 30 cents and sometimes far more of each advertising dollar flowing from advertisers to website publishers through Google's ad tech tools. Google's own internal documents concede that Google would earn far less in a competitive market. And that number is pretty important, right?

Because like 30%, for example, is also the take of the Apple App Store. anytime you see this percentage that drives a ton of profit and a ton of margin, but potentially at the expense of a more vibrant ad industry, that does start to capture some, set off some alarm bells. All right, let's talk about what the lawsuit is asking for in terms of remedy, because you're going to see like a lot of headlines about this today. So kudos to the producing team because we just went straight to the lawsuit to find out what the proposed remedy would be,

because it's being reported as people, that Google's may be ordered to be broken up. Here's what it says. The remedy would be, quote, order the divestiture of, at a minimum, the Google Ad Manager Suite, including both Google's publisher ad server, DFP, and Google's ad exchange, adX,

along with any additional structural relief as needed to cure any anti-competitive harm. Clearly, that last sentence is pretty broad, any additional structural relief, but we should clarify that the lawsuit is not specifically calling for, like, YouTube to be its own company,

or you have to dump Android. It's not necessarily about getting smaller. It's about making sure that Google does not own and control all of the tools of digital advertising, of which it controls more than a quarter across the internet, basically. Hey, everybody. It's time for a special interview with an old friend of mine, Rick Robinson. He is the GM of Age Tech Collaborative, which is brought to you by our friends at AARP, which I think, Rick, correct me if I'm not, at 52 as of last week. Am I able to be in AARP now? You are welcome to join. Oh, man, you and I got old. What happened? This is amazing. You guys are really excited about engaging the startup community in building technology. for folks who are getting up there in age.

Yeah, it's really exciting for us developing the H-Tec collaborative to try to put a focus on what we call H-Tech. And you might be wondering, like, what is H-Tech? Well, it's the intersection of longevity and technology, really. These are health tech companies. These are fintech companies. These are wellness companies. Essentially, it's going to be almost every company

because the market, 50-plus, is becoming so enormous that they can't be ignored. And then you've got a lot of people who are supportive. that market who can be any age. It's kind of a white space because not a lot of product developers and marketers and startups and investors have put a lot of focus on this, but it's huge and it's growing. In fact, it's around $8.5 trillion in terms of economic value in the U.S. right now. All right, thanks, Rick. When you're selling into the 50-plus market, having a relationship with AARP gives you a bunch of credibility. Of course, in the meantime, you can go learn more about the

Age Tech Collaborative at agtechcollaborative.org slash twist. And join us later in the and you hear more about the Age Tech Collaborative and how they help innovative startups succeed. All right. And then remember we mentioned earlier that this was the second major lawsuit that the DOJ has filed against Google in the last three years. Under the Trump administration in 2020, there was a lawsuit with 11 states over Google allegedly paying billions of dollars per year to make its search engine, the default web browser on various devices. Now, of course, the last time any company truly faced the prospect of a breakup was the U.S. versus Microsoft in 1998. In that case, the Justice Department alleged that Microsoft broke the law by bundling.

Remember, we talked about bundling with Slack and Teams. The browser, Internet Explorer, with every copy of Windows to the detriment of competition among browser makers. Microsoft ended up settling that case, but there was a moment where they had initially lost and there was an order saying that Microsoft had to spin off Windows as its own company. I don't know that we'll see anything that dramatic here. It's a big deal that the DOJ is filing these lawsuits, that they're going aggressively after these antitrust complaints. But, I mean, I think we should point out that history indicates that it's unlikely

there will be a dramatic fracturing of the business here. However, the sentiment is not on Google side. So things could get pretty interesting. Jason, you cannot stop him from tweeting, even if he's sick or on a plane, had a tweet about what a broken up Google might look like and said, you know, which we've said before,

I think on the show, that could actually increase shareholder value, especially if YouTube, Android, or the ad platform were spun out. I mean, you can imagine that Google's ad business standing on its own would be worth a lot. If that became its own company,

that would be pretty strong. but then the question is what happens to YouTube or even Google search if the ad market dramatically changes and its ability to leverage all of its own data. Because one of the things I think is interesting here is that the lawsuit doesn't address Google's data monopoly because there's not like a clean way to put that in antitrust terms, but it's a huge part of this conversation. The timing is also, I think, very interesting considering Google's, layoffs, but also the rumors, which seem to be sort of, I've heard on another podcast today,

people are talking about it as though this is a done deal that Sergey Brin might be coming back to help lead Google into battle against Microsoft and chat GPT and really return focus to its AI projects and how to commercialize them. It's interesting primarily because you have to think there had been stories about this coming for at least the last couple of weeks, so you have to think, you know, this is not a surprise. to Google executives. But it makes it tough. One of the things that happened with Microsoft

during that long, long battle with the DOJ is that that was considered a bit of a lost decade for Microsoft in terms of innovation. There was only so much they could do without getting themselves in more trouble. And on top of that, they were distracted. Like, having a big lawsuit against you by the DOJ is extremely distracting.

There's lots of discovery. You have to get your executives in to talk about what they knew and didn't know. You're combing through emails. And you are limited in how aggressive you can be in terms of innovating, launching new products, trying to put, you know, Microsoft and chat GPT down before they even get started. This could be a really tough time for Google, both competitively, ironically, and in terms

of fighting these antitrust and anti-competition lawsuits. So it's not an easy time for Sergei to be coming back. It also suggests that that could be part of the reason. It's also, I got to point out, terrible timing, considering that tech stocks were starting to creep back just a little bit. And that's over now. But although so far I will say the impact of the lawsuit, back to what I was saying earlier about how history suggests it's not going to be like an immediate, massive problem

for Google. So far, the impact of the lawsuit on Google's stock price is pretty minimal. The stock is down about 2% today. The broader market is flat. Kind of goes to show you, I guess, maybe how seriously the market takes these lawsuits at this point. We could all, we can maybe hope that antitrust is real, more than enforcement is real, but it's a long, long, long road. It seems like the market so far is betting on Google here. Speaking of antitrust, though, it is kind of an interesting day in that department because Live Nation Entertainment, which is the entity that was formed after Live Nation merged with Ticketmaster back in 2010, is in front of Congress today in what appears to have been a very

spicy hearing about its monopoly power, or at least its alleged monopoly power. And they're asking the question of whether the lack of competition in the ticketing industry has unfairly hurt consumers and artists. This is not new, of course. I mean, Pearl Jam has been trying to warn us about Ticketmaster since 1994, and that's even well before Ticketmaster and Live Nation merged. At that time, Pearl Jam actually sued Ticketmaster claiming that it was intending to monopolize the ticketing service industry.

In 1991, Ticketmaster had actually bought out its main competitor called Ticketron, which is an awesome name. Side note. The band highlighted that if you refuse to work with Ticketmaster or the venues that they had exclusive ticketing deals with, then you were out of luck. And that was a big problem. But in 1995, the Justice Department closed its investigation. The Pearl Jam Bill died.

I think they lost their lawsuit. And now 30 years later, Taylor Swift has brought this all to our attention again. Not that we haven't been sitting here complaining about the fees the whole time, because we have, but now things might be getting more serious for Ticketmaster. Here's where it sits today. This is, I mean, again, 30 years ago, Pearl Jam was like you're a monopoly. Since then, Ticketmaster or the Live Nation entertainment entity now controls over 70% of the market for ticketing and live events.

That is, again, not technically a monopoly, but the question is, are you engaging in illegal anti-competitive behavior. Ticketmaster is obviously not the only seller, but its large market share does give it a very dominant market position. And a lot of what this hearing was about today is the behavior. Does Live Nation retaliate against venues, for example, that don't use Ticketmaster, that use other ticketing systems? So the question really is buying the tickets, the venues, and then the actual entertainment. In 2010, when the merger was approved by the Department of Justice, they did require Ticketmaster to divest some of its business to competitors. Those didn't, really, those divestitures did not lead to significantly more competition in the ticketing sector.

And there was an interesting moment in the hearing today. Matt Stoller, who I love on Twitter, by the way, you should follow him. And he writes a newsletter called Big. He's been chronicling sort of anti-competitiveness and monopoly in the United States economy forever. He's the guy to go to. He said, in the ticket master hearing, Senator Mike Lee asks why the Obama administration allowed the live nation ticket master merger to happen. AAI is Kathleen Braddish gives a not very compelling answer that boils down to the DOJ was afraid of losing.

Wamp, see, again, this is why the stock market is not freaking out over this lawsuit against Google because the DOJ's history here is not great. But let's talk about how Ticketmaster ended up here because, honestly, if in the year of our Lord, 23, Taylor Swift finally brings down Ticketmaster, I'll go to one of her concerts. The Senate Judiciary Committee is holding this hearing because in November, pre-sale tickets for Taylor Swift's The Era's tour had huge amounts of technical issues and wait times. It was just like a disaster of a ticket sale rollout. And then Ticketmaster ended up canceling the public sale.

Taylor Swift issued a statement after the cancellation of the future ticket sales saying, quote, I'm not going to make excuses for anyone because we asked them multiple times if they could handle this kind of demand and we were assured they could. It's truly amazing, she went on to say, that 2.4 million people got tickets but it really pisses me off that a lot of them felt like they went through several bear attacks to get them. When it comes to addressing this specifically, the CFO and president of Ticketmaster's parent company Live Nation, Joe Burchold, said, quote, industrial scale ticket scalping and an unprecedented amount of bots were responsible for the large scale problems. People are not 100% having that because, like, ticket master, they control the platform. So if they added scalping and bot problem, which, p.S, like everyone knows is part of the ticket buy.

experience and Ticketmaster itself should maybe be in charge of stopping that. Nobody's buying it. Anyway, Jam production CEO and president said that bots were probably not to blame, saying you can't blame bots for what happened to Taylor Swift. There's more to that story that you're not hearing. This is all during this testimony today. Seat Geek CEO Jack Rootsender said there was a lack of quote, robust competition in live entertainment and that this harms consumers and venues who don't choose Ticketmaster.

and they're you should you should we'll link to some of the Matt Stoller tweets but the the kind of back and forth on this is interesting primarily because it's extremely bipartisan like everybody from all the sides of dials were yelling at them about this today. The Seat Geek CEO is calling to break up ticket master and Live Nation effectively to undo that. Now we don't again this is a hearing before Congress. It's live testimony. It's not necessarily. necessarily legislation or even a DOJ lawsuit, but it is a pretty big deal. Hey, everybody. It's time for a special interview with an old friend of mine, Rick Robinson. He is the GM of Age Tech Collaborative, which is brought to you by our friends at AARP. So how does the collaborative work? How do you help companies and investors kind of access these companies and these markets? So essentially what we do is we look for companies,

we incubate them, we invest in them, and then we bring them into this new environment. we call the Atec collaborative community. So, yes, we have pitch competitions that we run throughout the year themed, and some of them are open mic style. And it's a way for us to source and find great early stage companies, usually pre-series A. We invite some of them into our accelerator program, which is extremely high-touch eight weeks, four times a year,

where we bring in aging experts. We help get them best prepared to deliver their product or service to the market. And as I mentioned, we often invest in these kinds of, companies, and then they graduate into the H-Tech Collaborative Community, which is an online platform that makes up an ecosystem that we're developing that includes, of course, the startups, investors, test-bed organizations, enterprises, and business services, all in this one online environment where they can support and draw from one another. Great. So there's an online community that people can go visit. They can go visit that at

agtechcollaborative.org slash twist. Agtechcollaborative.org. twist. And so if you want to build in that market, if you want to sell into that market, if you want to invest in that market, this is a great way for you to partner with AARP, correct? Absolutely. Yep. All right. Let's talk about some competition. One alternative is Axis, which is a ticketing outlet for sports and entertainment that was founded by Aege. Aegee is the second largest entertainment behind Live Nation entertainment. Live Nation, of course, is the largest and they own Ticketmaster. So artists are starting to kind of rebel.

And I know this, thanks to producer Rachel, who is a country music fan. And she pointed out that Zach Bryan, who is a big country music star and popular songwriter, he's been super vocal about his thoughts on Ticketmaster on Twitter. And he is switching to Axis. So we pulled up some of his tweets about it. I mean, he has been no joke, right? Working class people can't even go to shows anymore at Ticketmaster. He tweeted in December.

I was in the Navy once. I made $2,000 a month. My buddy Austin and I spent $850 on 12th row tickets. Why is this normalized? He said, it's Christmas time and it's nothing personal ticket master, but the homies are out and angry next year. Best year ever until next year, huh? Old Sons said I was done touring, but I got a few shows.

and have some things I need to prove to ticket master, fair prices for everybody, and so on and so far. So he recently launched ticket sales on Access, and Rachel went to buy them. And so we want to bring on Rachel reporting to give us a firsthand account of the attempt. Hey there. Awesome. So, yeah, I did not get Taylor Swift tickets. Did you try? Were you like caught up in that?

Oh, yeah, I tried. Okay. Go back to that. What happened? My computer just like, I thought my only computer couldn't have it as everybody on the Twist team knows. And now everybody else will know I constantly have Wi-Fi problems. So I kind of thought it was like one of my Wi-Fi like shenanigans again. That's just because of your internet monopoly.

That's different from your ticket master monopoly. Totally different monopoly. They're just very special. Yeah. But yeah, I didn't get the Taylor Swift tickets. My friends who did didn't get tickets in Philly where they're from, they got tickets in Chicago and they were still $500. So for like nose leads. And then I've also heard of people going up like in the thousands, which is a little absolutely insane.

And that to be clear is because like scalper slash scalper bots came and bought up all the tickets. So every ticket ticket you could eventually get was a resale ticket. Exactly. Anything that Ticketmaster is responsible for, by the way, not Taylor Swift. Yeah. Exactly. And I've had issues with Ticketmaster before it actually dealt with like Penn State's football games. And for all of my siblings that have gone to Penn State, including myself,

You have to wait until it hits midnight to try to get your tickets because of how buggy the site is. It crashes. Overall, just like a not great experience. And this past year, none of my siblings, three of them that go to Penn State, got tickets to any of the football games. So Ticketmaster and me are not friends. So I was pretty pumped to see Zach Bryan over on Access. And I've been following him and his hate for Ticketmaster in general for kind of a one time on Twitter. And I was able to purchase one of his presale spots for a dollar over on AXS.

And it works. Basically, there's like a login you can do for AXS, which is pronounced access, like you said before. And once you get a pre-sale ticket, which is a dollar, that can be purchased for, I think his is open for like a week or two. So you're not rushing to get it. The site's not getting overwhelmed. But once you purchase that ticket, that means you have a spot. in order to wait in line, which I like a lot better, because I think paying that, like, $1 really does help minimize, like, the bots coming in, because not only do you have to pay, but you have to give them your personal information.

And I think with $1, like that $1 placeholder, when you go and to get tickets, you can still buy four tickets. So it's not like you're spending a dollar and, like, have the chance to only buy one ticket, you can't sit with your friends. I've used AXS before, and my only complaint was that I had to down download a new app. But one time I couldn't load an AXS ticket on my app because I didn't load it before I got to the venue.

And they still let me go up to a ticket booth and still claim my ticket everything. So overall, I'm super pumped. I think access is going to be like the main ticket company for a lot of events moving forward. Interesting. And it does seem like it really depends on artists making that switch. And then that was a big part of the conversation in the congressional testimony was whether Live Nation, aka Ticketmaster, actually retaliates against artists who choose a different ticketing

platform. So it'll be curious. So it takes like, I mean, it's so it's great that Zach Bryan, for example, is like leading the way doing this because that's, it could be kind of scary, right? And these are concerts, too, that are held in like pretty big venues, one of which is like red rocks in Colorado, which is like a giant outdoor, really popular, beautiful stadium. built literally into the red rocks. So that's really cool to see that even venues,

it seems to be pretty open. And again, if anybody else is interested in checking out their website, that is AXS.com. It's spelled access, but it's pronounced access. I honestly feel like there's a lot of room in this space for startups to work in, though, as much as I prefer access over Ticketmaster. There's still just a bunch of bugs.

There's another startup. that I have used before for more things like DJ sets and finding out about events Jeremy called Dice. Producer Justin was the person actually to show me that. So shout out to producer Justin. Dice is a London-based startup. And its big thing is it really does help you discover events, but it's also just ticketing.

It raised $122 million in its series C back in September 2021. And that was at a $400 million valuation led by SoftBank. So that was pretty cool But their customer service sucks Like it's really really bad in my opinion I've had a ton of issues with them And unlike access

If your ticket isn't on your app Before showing it to the venue And if that venue doesn't have really good internet You can't show your ticket You're out of luck It isn't one of those things where you can go up to the ticket booth And say hey listen my app's not working So

Is I just startup that wants to work in a space You don't screenshot all your stuff And put it in your photo album like a boomer. Oh, I screenshot the email confirmation. Yes, I'm an aggressive screenshoter, totally. Yeah, that's saved me with AXS. But in the AXS, the access situation, what happened is I didn't have it.

I think I had to reload the app. Like, you know, after a while an app gets undownloaded from your phone. Yeah, what the hell. Stop doing that Apple. Yeah, that's what happened with me with them. And I actually accessed the first time I ever used them was for a mad realities event, which is a New York based, like a crypto dating show that was happening for a little bit, which was really cool.

So, yeah, for your startup, please. If your startup, get into the space. And luckily, now there's so much attention on Live Nation and the Ticketmaster hegemony, that hopefully they won't be engaging in, like, wide-scale anti-competitive practices, like retaliating against you or making sure that you can't get a book a show at any of their venues. Right. So shout out to Zach Brian for really taking action here as like an artist trying to get away from Ticketmaster. Shout out.

Hopefully others will follow. I think we should go to a show. All right. Awesome. Thanks, Rachel, for the on the ground reporting. Thanks, Molly. Thanks. All right.

And then now it is startup time. Next up we have two awesome founders from the Launch Accelerators 26th cohort. You're going to get those interviews back to back and learn all about these two amazing products with these amazing energetic founders. enjoy that's coming up right now when COVID hit I was struggling with my weight so I tried a continuous glucose monitor CGM you probably heard of them and this product is called Nutrisense and it helped me understand why I was gaining weight and it helped me get my weight under control because I understood when my glucose was spiking I sometimes stress eat cereal with whole milk would spike my glucose like you wouldn't believe and then I'd have a small portion of full fat ice cream like a

Hagendas? And I was like, wait a second, I am having my glucose spike much lower. I would have thought the opposite. I would have thought the Hagenas was worse than a bowl of cereal. If you don't have the data, you can't manage it. With the data, you can manage it. And you will be able to learn how your body responds to these different foods. Here's how it works. The CGM, that continuous glucose monitor, it's a small device. You put on your body and attracts glucose in real time. The application, it's painless. Then you scan your CGM, right? You look at it. You visualize the data. You start wagging your meals. You take pictures. etc. And you're going to get expert guidance from a dietitian based on your goals. And that's how I learned

about the sugar versus ice cream. Example I gave. Understand this data will make it much easier to identify what you're doing well and where there's room for improvement. Let Nutrisense help you reach your full health potential. It was a big part of my journey. Visit nutrasense.io slash twist and use the code twist to save $30 and get one month of free dietitian support, N-U-T-R-I-S-E-N-S-E-E-O-S-T-T-E for $30 off and one month of free dietitian support. All right everyone, the launch accelerator 26th

cohort just wrapped up and over the next few weeks I will be interviewing all the founders from that cohort. Today, I'm very excited. I have Rian Boitler who is founder and CEO of Gavalo and Rian, welcome and congratulations on completing the accelerator.

Thank you. Why don't you tell us in your own words what Gavalo does? Well, I could tell you or I could show you, which I think might be even better. Exactly. In your own pictures, what Gavalo does. That'd be great. Yes, yes, yes. So Gavalu is reinventing the digital gifting experience and we are a Shopify app. Okay. So meet Bobby. He's the VP of Commerce for Felix Gray. And they recently migrated from a custom CMS over to Shopify Plus. And they immediately started using the Shopify native gift card solution. Now, Bobby has a problem.

because the native gift card solution only allows the buyer to add the gift card to the cart. And that means that the buyer receives a gift card. The gift recipient never receives a gift card. So it's not really a gift experience at all. It's like this really disjointed, yucky experience. And it's like, uh, and then people don't use gift cards. And it has this whole big cascading effect. And this doesn't work for Felix Gray.

And this doesn't work for Bobby because gifting is a major component of their strategy. And so that's when they found Gavalo. With Gavalo, you're able to add a gift card, delineate the name, email, and then delivery date, as well as the gift note. And then what Bobby loves even more is what's under the hood, the advanced analytics, especially the redemption right there, the ability to scroll down and see who's opened it. You can see that on the right. Then, of course, his customer experience team loves that you can look up a customer and say, you know, some of his customer say, hey, I didn't get that gift card. I never spent it. And then you can go in, you say actually you did open it and you spent it.

But if they're upset, maybe you resend the email or if they didn't have a great customer experience, you update that balance. The other feature that Bobby really loves is this. So this is just sending a gift card from the admin, but also importing gift cards in bulk. So this is used in a lot of sales and corporate gifting. And this configuration page is loved by their UX team because you can make Gavalo look exactly like your Shopify store. They'll never know the difference.

And of course, Bobby loves integrations like Clavio because Clavio helps him with the integration with Gavalo, increased customers, LTV, AOV, and then of course with retention. Now, this is something that I don't think you've seen yet before.

So we also have corporate gift. I'm like, hello, there's more. Let me actually, though, let me back up, though, and ask a couple clarifying questions about, because some people, will be listening to this and not seeing. So fundamentally, what's the problem that's being solved here? If you're a Shopify merchant, it is hard for you to sell gift cards to your store in an effective way that you can track. Like, what does the analytics dashboard, for example, do for a merchant?

Absolutely. So the fundamental problem with the Shopify native gift card experience is that it's never a gift. It becomes this challenge where it gets sent to me, right? If I'm the buyer, it gets sent to me. I have to forward it to you. Then I have to text you. And it's like this really awkward process. And that's gross. And nobody likes that.

But one of the components that really differentiates Gavalo from any of its competitors is that advanced analytics to your point. And for instance, 57% of all gift card recipients never redeem their gift cards. Now, there's a way to fix that, right? And with Gavalo, it's actually, we flipped it on its head. 75% of all of our gift cards that have been issued have been redeemed in year one. And we're attributing that to the fact that you can track the redemption, right, right in the analytics. And also with our integrations with the email providers, Clavio, Omnison, and Drip, to send out those reminder emails. Like, hey, remember that gift card you got?

hey, you've already shopped with us and you like X. Have you thought about using your gift card for Y? Right. And just reminding folks to use them because that's a major problem with gift cards. It's not that we don't want to spend gift cards. It's that we forget we have them. And especially physical gift cards. They're like in our wallet or they're in our email.

You forget them. And then all of a sudden, you know, it's the pandemic. This is what happened to me. I open a drawer and there's 30 gift cards for my daughter's bot mitzvah. I was like, oh, forgot about those. Shopping. Let's go shopping, just getting everything's closed. And then how is if, say, you know, 50% of those gift cards don't get redeemed?

How is that a problem for the merchant? Like, are those, is that just hanging out there for them on their balance sheet somehow? It is actually hanging out for them on their balance sheet. And it's not hanging out on the right side of their balance sheet. That's hanging out as a liability. And so there's this common misconception with gift cards that, that merchants should just sell the gift cards and get that cash in. But the reality is with Gavalo, when you spend, when you redeem a gift card, on average, their AOV goes up $70, which is higher than the national average.

For anybody who doesn't know? Oh, yes, of course. We love our acronym soup in commerce enablement. average order value. Got it. Thank you. Great. Yeah. So not only is the merchant, they're getting $70 more than what they would have gotten before.

And so I always challenge merchants to flip their sinking on its head and say, no, no, no, no, it's not about the 50 bucks you just made. It's about the $70 you're going to make. And it's about winning that customer over for life, especially in this world where, you know, we've had our iOS changes and we're headed towards a coquiless future, the more data we can get and the more buyers we can bring in and retain, the better. Got it. So you're a Shopify merchant.

You need to, first and foremost, be offering gift cards. Yeah, absolutely. And this is a way to do that, right? Like baseline. This is a way to at least to start doing that. Yes. And then most of the time when merchants offer gift cards or whatever Shopify is built in tool for that just is not full.

featured enough to actually get the merchant all that they could be getting from the skip card experience. Absolutely. Absolutely. Enter Govallo. Okay. And then you are, and because you are like Shopify expert, galore, the queen of Shopify. Tell us you're a Shopify Plus certified app.

Tell me why that's important. Okay. So that's super important. So Shopify Plus certified app means that we hold, we hold special insurances. We've been technically diligent. ginsed multiple times we hit all of these thresholds. And it's also important because there's only 98 of us. So the last class, which is the one I was in, it was it was us and Zen Desk. And I did think at the time, I was like, wow, that's, that's a heck of a person, you know, a heck of a brand to be

next to because they're doing, they're publicly traded company and they're crushing it. And it, it just means that if your Shopify Plus certified app, it's an app that is trusted and it's an app at Shopify Plus, when they're selling into enterprise, that they're recommending you. And they know you're stable. They know you don't have downtime. And they know you give flawless customer service. So they know there's 8,000 plus Shopify apps in general, but there's only 98 of us. Amazing.

And then tell me how you make money. So we make money in two ways. One, we have a SaaS fee. Although I will caveat, we do have an essential plan, which has $0. dollars. It's a fairly limited plan, though, in terms of functionality. But you know what? It gets you in the door. And if you're a smaller mom and pop shop, that's the one you should start on. We do it, and we do a take rate, right? So we do for the essential plan, a 2.9% take rate. That means for every, if you issue a $100 gift card, we make $2.90. And then we have premium plans as

enterprise plans. And yeah. Got it. So is SASPi, assuming, that a company, a merchant subscribes, and then a take rate whether they subscribe or not. You have a take rate no matter what on every trend, even on the premium plans? Yes, we have a take rate no matter what. Perfect. They just go down depending on which plan you're on. Right. And then, you know, our classic accelerator question, of course, for every founder is,

what's your path to $10 million and $100 million? Absolutely. I love this question. So this year we're taking on backwards compatibility in terms of point of sale. which sounds nerdy because it is. So basically there's a lot of folks out there who have like a business mullet situation going on. So inside of their brick and mortar, right,

and we're seeing this return to retail and Shopify has signaled a return to retail. And so they have Square in their store, but they have Shopify e-commerce, right, solution. If you buy a gift card on Square, you cannot use it on Shopify and vice versa. So then the merchants offer gift cards nowhere. Okay.

So that's a problem. That seems bad. That seems bad. It seems like gift cards wouldn't be appealing then. So that's what we're aiming to solve this year. We then, so this is what that's going to get us over into the $10 million range. That and what's coming after that, which is kind of our stripification moment, which is a platform agnostic API. So we want all SMBs to have.

access to this functionality. It's super important to us. We want them to have it. But as of right now, there's a lot of limitations in terms of platforms and how the infrastructure works. Now, what happens next after that and what I'm really excited for is we're kind of taking on Black Hawk. So for those of you who are like, what is Black Hawk and why should I care? Black Hawk are the people that power target gift cards, Cole's gift cards, basically all the gift cards. I think Amazon is powered by synchrony.

Either way, though, if you get a big gift card like from, you know, a grocery store off the side, that is probably powered by Blackhawker Synchronic. But there is nobody providing stored value cards,

which is another word for a gift card, two SMBs. Hmm. That work in a way, right? You know how you can get those cards? It's like, oh, you can go to Chili's or, TGI Fridays or the conglomer. The whole rack of them that you see like at Target.

Yeah. Yeah, you can't do it. So, but it's like, well, what if, you know, fellow, which is one of our merchants, wants to start working with Chamberlain coffee and offer a gift card that covers both they can't. Oh, I see. See, this is where like, I don't want them to hear this. Yeah, I know, kind of, right? Like a little bit. I know.

But that's it. That's a bad. But it's really important that SMBs have that access. because SMBs are the backbone of our society. Yeah, 100%. Rian Boitler, this is why I'm obsessed with Rian, you guys, founder and CEO of Govalho. Congratulations and can't wait to hear more from you.

Thank you so much for having me. Thank you. All right. Daniel Sikai is the founder of Hay Hire and was part of the Launch Accelerator's 26th cohort, which just graduated. And Daniel started Hay Hire back in 2018. Of course, over the next few weeks,

I'll be talking to all of our accelerator founder. Daniel, welcome and congrats on completing the course. Thank you. Appreciate it. And it's great to be here. Daniel, tell me, in your own words, what does Hay Hire do? So Hay Hire helps businesses hire hourly workers. What we do is we focus on a few things to help them find the right employees.

A very big problem that most of these businesses have been facing is finding the job seekers that are actually local to their place of business and then communicating with them. So what we do is we allow the business to post their positions to attract actual local job seekers. To do that, they can post our QR code banners at the place of business. They can post it on their social medias and their website. And then job seekers will be able to scan that QR code, create a profile in just under five minutes, and then use that profile to apply to that business in just two taps. They can also open the map on our app and find other businesses around them

and use that same profile they created to apply to any of the other businesses. And then we also facilitate the communication. So that is the next problem that they've faced, other than sourcing the right candidates communicating with them was a very big problem that they've faced. So we have a chat system on our platform where the, employer chats and the job seeker gets it as a text message. So it's just a very instant connection between job seeker and employer, which is what brought our average time to hire

down to two days, which is the lowest in the market. And this is remind me, primarily the platform is designed for hourly workers, so somebody who might be looking to work at a restaurant or a hotel, all the places that are desperate to hire right now? Yes, the high turnover jobs. Most of our customers currently are restaurants, cafes, bars. We have some retail stores using it as well, but since the turnover is so high for the restaurants, they're in a constant demand of employees. The supply is there as well, but the handshake, that's the most crucial part. So that's where we come in and really help them find each other and communicate. So walk me through the differentiators. It sounds like the speed is key here.

And then how would it normally happen? Like you might see a help wanted sign, like sort of, you know, give me a compare and contrast here. Yeah. So you'll still see a lot of businesses with just like a now hiring, a by within sign at the door or the window. And then the current situation is, you know,

a job seeker that sees the sign and interested in working. They're going to walk in and they're going to ask, hey, are you guys hiring? Yes, we are. This is the email. Send your resume over here. And then they'll do that. And then once the manager has some time, they're going to open their email. They're going to see a bunch of random spray and prey applications that all look different. And then when they have some time to go through them, they're going to try to reach out to the ones that they like. But hearing back from them almost never happens. So the main things would be having the job seeker,

create a very standardized, generic looking profile, so it's very easy to compare. And then, yeah, the communication as well is definitely one of our main defiant creators. And then it sounds like the other one is locale, like the kind of geo-fencing, right? Like you're making sure that people don't necessarily have to have a long commute

to the places they apply? Yeah, and that would be the main thing. Yeah, making sure that those job seekers are actually local. So basically, by not posting these jobs all over the place online, we really restrict the places these job seekers are going to come from. So the only way a job seeker can find this job is if they have been to the place physically, if they visited their website, which usually means they're a new or returning customer,

or if they follow them on social media. The only other way is if the job seeker opens the map on the app, they can see businesses that are within their range. So that way it really limits it down to people that are either customers of the business or people that live around it. Does that restrict the pool of potential applicants? It does. It definitely does, but it filters out most of the spam, you know, non-relevant, non-local applicants.

originally we thought, you know, maybe we won't get enough job seekers per each position, but we were even surprised to find out that we've had a very high ratio of job seekers per business. So we have an average of 65 job seekers per business with an average of three positions per business, so an average of 22 job seekers per job post. That's fascinating. I mean, I keep hearing all these news stories that are like, no one can hire, like what what do you think

the disconnect has been? Like is it literally just as simple as solving for communication and proximity? Not simple. Obviously,

I know your team works really hard. Yeah. So yeah, other than the proximity part, it's definitely the communication. One thing people don't realize is that most job seekers in this space,

you know, they're Gen Z, people who don't really check their email every day. And that's the main source of communicating with them through every other platform and solution. So by allowing the employer to instantly reach out to this job seeker through text message, we've had numerous cases of the employer being able to call the applicant for an interview

within an hour of them applying. So that way, there's just a very instant connection. And we've had people make hires, you know, two, three hours after the job, applicant actually apply. Tell me how Hay Hire makes money. So we have a very simple model. We charge a business $100 a month,

and that's per location. So if they have multiple locations, it's actually $90 a month. And that will be for unlimited positions, unlimited chats, unlimited applicants, unlimited users. There are no hidden fees. There are no additional costs.

That way, even the smallest business that hires, you know, maybe one person a month, they're going to be able to use this and not have to worry about breaking the bank on a, you know, $500 to $1,000 a month platform. And then how do you acquire businesses to be on the platform? Like, does that, you know, because do you have to acquire like every business in America one at a time? Well, not one at a time, hopefully. But we have a few different channels of go-to market. So how we acquired all of our customers so far was,

door-to-door sales. So both me and my co-founder, Benjamin, we have gone door-to-door here in Austin, Texas, and just selling it to businesses. We kind of tricked our way into meeting the decision-makers. You know, we just go in and ask, hey, are you guys hiring? And if they say yes, okay, who do we talk to about applying? And if the manager's there, we sit down with a manager and we pull out the demo right away. We don't waste their time. We make it very clear we're not here for a job because They're not very happy when people kind of tricked them into meeting them. But it's working. We've had a very good conversion rate of 25% on every manager that we've met.

So that's something that we definitely intend on continuing that door-to-door, local. So here's the thing. Seven out of 10 restaurants in the U.S. are independently single location operated. So the manager or the owner or the office, operator, they wear a bunch of hats. So they're in charge of everything from, you know, making sure everything's good at the restaurant, running the kitchen, running the bar, supplies, obviously employees and hiring. So a lot of them don't really have time to look at their emails and go through all of these spam companies trying to sell them their product. The one thing

we've noticed is if you're at the place of business and if you're there sitting with a decision maker, you have a way higher chance of closing them. So that's been our strongest working strategy for now. We're also, we just released our enterprise version. So some of our advisors have a lot of connections with big, you know, multi-location franchises. So we're starting to get on calls with some of those. And then the third would be working on SaaS partnerships with some very strategic companies.

So that would be the third thing. But that's something we're probably going to start. putting more of a focus on in Q3. Awesome. And then finally, our clutch accelerator question, what is your pathway to 10 million? It sounds like you covered some of that, but your pathway to 10 million and then $100 million. So yeah, pretty much, like I said, our plan is to build. So we're actually hiring a few salespeople to get started next week here in Austin. So our plan is to have a local takeover and just have every business in Austin.

then if they're not using us to at least know who we are, and then expanding into additional markets, you know, we want to have a steady growth. We don't want to grow too fast because we want to stay loyal to our customers. So other than building local sales teams, it is working with those strategic SaaS partnerships and hopefully closing an enterprise deal this quarter.

We're already talking to a few. So that's, those would be the main, the main things that we're going to do in order to reach 100 million in ARR. Amazing. Daniel Sikai is the founder of Hay Hire, and we look forward to hearing more from you. Thanks so much for the time. Thank you.

Thank you, Molly. It's been a pleasure. All right. Thanks for listening. Everybody, please continue to send Jason your well wishes. And if you want to help us out, which I'm sure he would appreciate, if you love this week in startups, please, please help us out by taking our listener search. at this weekendstartups.com slash survey.

To entice you, we are giving away $10.50 Amazon gift cards to random responders. Please fill out the whole thing. The half responses, unfortunately, don't count. It only takes a couple of minutes. We've already had hundreds of responses. Thank you to those of you who have jumped on this already. We would love to have thousands because we want to have better data on who listens to the show. We really, really appreciate it.

And we'll see you back here tomorrow.